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Best way to buy pension
Freecall
Posts: 1,337
Forumite
I would be interested on the views of others on the best way to spend £9,500 with the intention of maximising wealth in retirement.
Situation : Married couple both aged 56, both intend to retire at 57, both good health, both ISA'd out for many years, both 36 years NI.
Option A
Buy additional pension in female’s (state run) final salary scheme.
Benefit £500pa, CPI linked, no partner benefits, all guaranteed.
Option B
Make contribution to male’s independent pension scheme which would be £11,875 after tax and start drawdown at 4.2%.
Benefit £500pa initially, no guarantees of course but sustainable-? drawdown figure.
BUT : Female will be basic rate tax payer in retirement, male will have personal allowance to spare (until the state pension kicks in at age 66).
At first glance Option A looks very inviting but after tax the benefit is only £400 whereas Option B gives more cash but leaves an exposure to many risks (including legislative risk) as to what might happen in 9 years time when probably part of the income will be exposed to tax.
As they used to say when I was at school - Discuss.
Situation : Married couple both aged 56, both intend to retire at 57, both good health, both ISA'd out for many years, both 36 years NI.
Option A
Buy additional pension in female’s (state run) final salary scheme.
Benefit £500pa, CPI linked, no partner benefits, all guaranteed.
Option B
Make contribution to male’s independent pension scheme which would be £11,875 after tax and start drawdown at 4.2%.
Benefit £500pa initially, no guarantees of course but sustainable-? drawdown figure.
BUT : Female will be basic rate tax payer in retirement, male will have personal allowance to spare (until the state pension kicks in at age 66).
At first glance Option A looks very inviting but after tax the benefit is only £400 whereas Option B gives more cash but leaves an exposure to many risks (including legislative risk) as to what might happen in 9 years time when probably part of the income will be exposed to tax.
As they used to say when I was at school - Discuss.
0
Comments
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The first one looks like a massive winner to me. Index linking is worth a lot. If inflation is 3%, at age 80 that one is £1000pa - could you possibly get that out of your drawdown? You need a strong investment return.0
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